Governance Council Proposal - Treasury Deposit to Stablecoin Pool

Governance Proposals
1

The Orca Governance Council (the “Council”) is putting forth a new proposal as described below.

As a refresher, the process for Council proposals is as follows:

  1. Forum post (minimum four days) to inform and solicit feedback from the Community (as defined below);
  2. On-chain proposal with Council voting (five days);
  3. Cool-down period (two days) that allows the Community to veto a proposal if desired.

If the proposal passes the Council vote and is not vetoed by the ORCA tokenholder community (the “Community”), then the contents of the Council proposal will be implemented. If the proposal doesn’t pass the Council vote, or if the Community vetoes the Council-approved proposal, then the contents of the proposal won’t be implemented.

Proposal

At the last Council meeting, all the members in attendance expressed their support of a proposal to deposit the equivalent of $300K from Orca’s fee treasury (which has a balance of approximately $3.6M) into the protocol’s USDC-USDT concentrated liquidity pool. The motivation and considerations of this proposal are set forth below. This Council proposal will be subject to an on-chain vote next week. The Council is soliciting feedback from the Community in advance of its vote, so please share your thoughts in the comments!

Motivation

To deepen liquidity for stablecoin trade execution on Orca’s concentrated liquidity automated market maker (CLAMM) smart contract and, in turn, help Orca’s new smart router provide better pricing for more pairs, including SOL-USDT.

Considerations

The Council has considered, among other things, the following in evaluating this proposal:

  • Likelihood of Impact: Orca has approximately $650K in its concentrated liquidity USDC-USDT pool, while its major competitors currently have between $1M - $2M of liquidity in that pool.

  • Potential Risks: Depositing a portion of Orca’s treasury into its concentrated liquidity USDC-USDT pool carries with it certain risks, including the following:

    • loss in the event that either USDC or USDT depegs;
    • smart contract exploit risk; and
    • deterring additional outside capital from depositing into the pool because each liquidity provider’s pro rata share of fees could potentially decrease.

  • Investment Size: The Council considered depositing a more significant portion of the Orca fee treasury into the USDC-USDT pool to maximize impact. However, before diving into the deep end, the Council believes it would be prudent to test the waters with a $300K deposit. If there is a meaningful impact on Orca’s competitiveness for stablecoin trade execution, then the Council would consider increasing the deposit.

Governance Process

Forum Discussion

This proposal will be posted here for a discussion period of at least four days before it is formally put to a vote. This period allows Community members to review the details of the proposal and share feedback.

Voting

After four days, a Council member may submit the proposal using their Council Token to the Signaling Governance account (6d76J…4HUf9). The account contains the following voting parameters:

  • Voting Period: 5 days

  • Council Threshold: 4 “Yes” votes

  • Veto Threshold: 1,000,000 ORCA

Cool-down Period

This account also has a two-day cool-down period, which begins after the initial five-day voting period. In other words, if the vote is passed after five days, the Community will have an additional two days to veto the proposal.

Execution

If the veto threshold is not met during the cool-down period, then the proposal will pass and its contents will be implemented.

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